General Dynamics Land Systems-Canada, a business unit of General Dynamics Corporation (GD), has received a $41.4 million contract for the delivery of three modified orders from the U.S. Marine Corps Systems Command. The contracts were signed through the Canadian Commercial Corporation, which is a Crown Agency of the Canadian Government.
Under the contract, the business unit will upgrade kits for RG-31 Mk5E vehicles. The modified and advanced kits will enhance the operation of the vehicles to the most up-to-date production pattern. RG-31 Mk5E is an extended Mk5 with larger passenger and cargo capacity and superior blast and ballistic protection. The delivery of the kits is expected to be completed by January 2012.
General Dynamics was the fourth largest U.S. defense contractor in terms of revenue in fiscal 2010 after The Boeing Company (BA), Lockheed Martin Corporation (LMT) and Northrop Grumman Corporation (NOC). We view General Dynamics as a well-run company that is likely to continue delivering on expectations, driven by revenue growth, margin expansion and cash flow generation.
However, an uncertain political stance makes future defense budgets vulnerable to cutbacks. Additionally, the falling order backlog is a headwind for the company. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Going forward, the Zacks Consensus Estimates for first quarter 2011 and fiscal year 2011 are currently at 1.64 per share and $7.13 per share, respectively.
Based in Falls Church, Virginia, General Dynamics is one of the leading companies in business aviation, information systems and technologies, shipbuilding and marine systems, and land and amphibious combat systems, as well as armaments and munitions.
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